MNI BRIEF: Japan July Factor Output Rises First In Two Months

MNI (TOKYO) - Japan's industrial output rose 2.8% m/m in July for the first rise in two months following June's 4.2% decline, thanks to higher production of motor vehicles and electric  machinery, and information and communication electronics equipment, data released by the Ministry of Economy, Trade and Industry showed on Friday.

Production of motor vehicles rebounded like Bank of Japan officials expected but bank officials are vigilant against the outlook for production as the survey showed weaker production in August and September.

Based on its survey of manufacturers, METI projected industrial production would rise 2.2% in August (revised up from +0.7% forecast last month) before falling 3.3% in September. Adjusting the upward bias in output plans, METI forecast production would fall 0.9% m/m in August.

Based on this assumption, production would fall 0.6% q/q over Q3, the first drop in two quarters following Q2's 2.7%.

In July, production of motor vehicles rose 1.9% m/m, the first rise in two months following June decline 8.9%. Production of electric machinery, and information and communication electronics equipment rose 7.5% vs. -2.8%.

The METI slightly upgraded its assessment from the previous month, saying that industrial production is marking time. The previous view was that industrial production is weakening, although it is marking time.